Plastics plant is a $100 million headache for U.S., Texas companies

M&G Resins USA’s Jumbo Project under construction in Corpus Christi. The facility - which would make plastic for bottles - has more than $100 million in liens filed against it.

M&G Resins USA’s Jumbo Project under construction in Corpus Christi. The facility - which would make plastic for bottles - has more than $100 million in liens filed against it.

Photo: Gabe Hernandez /Caller-Times

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Workers on the site of the M&G Resins USA plant in Corpus Christi. Over $100 million in liens have been filed against the $1 billion facility, which, when completed, would make plastic for bottles.

Workers on the site of the M&G Resins USA plant in Corpus Christi. Over $100 million in liens have been filed against the $1 billion facility, which, when completed, would make plastic for bottles.

Photo: Gabe Hernandez /Caller-Times

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Al Wells, above left, owner of Welco Steel and Express Metal Work, and his father Richard Wells, an employee, work to remove metal roofing from a building in the Dominion that they are demolishing, on Monday, April 10, 2017. Both of his companies have been effected by the M&G Resins USA site in Corpus Christi, which owes Wells $2.7 million. less

Al Wells, above left, owner of Welco Steel and Express Metal Work, and his father Richard Wells, an employee, work to remove metal roofing from a building in the Dominion that they are demolishing, on Monday, ... more

Photo: Bob Owen /San Antonio Express-News

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Al Wells, left, owner of Welco Steel and Express Metal Work, helps his crew remove metal roofing from a building in the Dominion that they were demolishing, on Monday, April 10, 2017. Both of his companies are owed $2.7 million by the M&G Resins USA site in Corpus Christi, which has over $100 million in liens filed against it. less

Al Wells, left, owner of Welco Steel and Express Metal Work, helps his crew remove metal roofing from a building in the Dominion that they were demolishing, on Monday, April 10, 2017. Both of his companies are ... more

When completed, the facility would produce 1.1 million metric tons a year of polyethylene terephthalate or PET plastic, the material used to make things like soda bottles.

Al Wells, who owns Express Metal Works and another steel fabrication company in San Antonio, was riding a wave of money and promises in late-2016 as he tripled his workforce for a contract worth up to $6 million with M&G Resins USA, an American subsidiary of Italian-based petrochemical giant Mossi & Ghisolfi Group.

Six months and $2.7 million of unpaid bills later, the 37-year-old Army veteran is struggling to keep his metal working and steel fabrication businesses afloat, taking out a second mortgage on his house and returning to work in the field.

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"The noose is quickly tightening," Wells said of his legal and financial predicament.

Mossi & Ghisolfi Group partnered with Chinese government-owned Sinopec Engineering on the project, which is being backed by several Chinese banks and Mexican multibillionaire Carlos Slim.

Perry supported Mossi & Ghisolfi's decision to bring the site to Texas when it was announced in 2011.

"I'm pleased M&G Group has chosen Corpus Christi as the location of its new North American plant, creating hundreds of jobs for Texans and further strengthening our state economy, and wish them success at this new facility," Perry said at the time. A call to the Department of Energy to speak with Perry, who is now energy secretary in the Trump administration, was not returned.

Now more than 40 liens have been filed against the project since 2016. In an email, Mossi & Ghisolfi Group spokesman Terry Tyzack said: "Texas law allows a company working on a construction project to file liens to secure a claim for money due for work done on a project. A lien claimant does not have to have any backup to file a lien, and it is not unusual for the lien claim to be well in excess of what is actually owed. … We continue to work through the process and attempt to resolve as many of these issues as possible."

The project was originally supposed be completed by the end of 2016. Tyzack says the company now plans to finish the plant by mid-2017.

Wells' two companies - Welco and Express Metal Works - fabricate and erect steel foundations to hold the piping and tanks used at petrochemical facilities. Before Project Jumbo, Wells had 40 employees and a weekly payroll of up to $40,000. But he ramped up to 160 workers with a weekly payroll of $250,000 to fulfill the contract.

As a smaller contractor, Wells told the firm that hired him, Rock Hill, S.C.-based Integrity Mechanical Specialists, that he couldn't wait weeks or months to get paid for the work. Wells said IMS agreed to wire Wells' payroll costs at the end of every week so his employees could deposit their checks the following Monday.

By the third week, Wells said he had "about 60 guys in my office who said their checks bounced."

"I found out IMS didn't wire the money," he added.

Now Wells has $2.7 million in mechanic's liens filed against the project, is down to 18 workers and his bank has "cross-collateralized everything I own," he said. After demanding payment from IMS in December, Wells and his crews were given 48 hours to leave the Corpus Christi work site.

IMS confirmed that it and its roughly 800 subcontractors were booted off the site in early December after demanding payment on $53 million of work.

Kenny Middleton, a former IMS vice president who is now the CEO and president of Rock Hill, S.C.-based Spire Energy Solutions, said "M&G was the type of customer that would … lead you along, give you a little bit here and there and stay enough involved to keep you interested."

A 28-year-veteran of the welding and construction business, Middleton said he's "never seen a project in this much turmoil, this much confusion, this much bad money, in my life."

After numerous delays and lack of payment, IMS stopped work and sent a demand letter for payment on December 8, he said. The M&G Resins subsidiary that hired IMS terminated that contract on Dec. 9, IMS said in a lawsuit filed March 27. A final termination letter for other work IMS was doing in the facility was filed Dec. 15.

The liens are the latest for the project, which began construction in 2013 after M&G signed a $1 billion engineering, procurement and construction contract with Sinopec Engineering, a Chinese-government owned construction company.

Some U.S. contractors said M&G Resins USA hasn't paid them since 2015. At least 40 other companies besides IMS have liens of $47 million against the project.

Wells said he did his due diligence when he considered joining the project. He didn't believe there would be a money issue and said "when you hear lien on a job site, it's like saying bomb in an airplane."

Now his companies are in "survival mode." On Monday he and a crew that included his father were stripping tin roofing off of an old goat shed in The Dominion as they prepped to demolish it. It's a small job but one that Wells knows he can complete.

"We've turned down probably $3 million worth of work this year," because the company doesn't have enough capital or resources to take on bigger jobs, he said. "The worst thing we want to do right now is overextend ourselves at this point because it would be the final nail in the coffin."